MGM Delays Atlantic City & Las Vegas Developments

Andrew Calvo | October 31, 2008 | 0 Comments

I cant say that I’m too surprised, but yesterday MGM Mirage announced that they are suspending development on two of their casinos – the MGM Grand Atlantic City and their joint venture with Kerzner International on the north end of the Las Vegas Strip.

Both of these projects didn’t even break ground yet – so there won’t be any abandoned construction sites similar to Boyd Gaming’s Echelon development, but it still does leave a bit of unease in the air as to how these projects will finally end up.

MGM Grand Atlantic City

MGM Grand Atlantic City. The WaterClub is on the left and Harrahs is on the right

I was most excited about the MGM Grand Atlantic City property because its near where I live, and also the size and scope of the project would make it the largest casino development in Atlantic City up to this point, it’s also due to be the tallest building in Atlantic City (topping Revel) and thus the tallest building in New Jersey. It was first announced late in 2007, and construction was supposed to have begun late in 2008. Currently the property sits vacant except for some construction trailers probably left over from the WaterClub.

Before the project was officially announced it was to be called CityCenter East – sharing a name with MGM Mirage’s other development in Las Vegas. The MGM Grand Atlantic City was to include three separate hotel towers, each with a unique theme. When the project was intiailly announced, one was to include very high end suites, another was residential and the third was hotel rooms, yet each would have a different interior design. At the time it was thought that all three towers would be run by MGM Mirage – compared to some of CityCenter’s towers being branded as Mandrian Oriental.

The location of the project is right in between The Borgata/WaterClub and Harrahs, making the area which was once wide open, full of development. A major factor allowing the development of this project to be so large is the closing of Bader Field. Bader Field’s landing area was right in the way of this land – thus there were restrictions from the FAA as to how high buildings can be, now that Bader field is closed – those restrictions are not there any longer.

In addition to the three towers, the casino gambling floor would have been the largest in Atlantic City and also include a convention center, which would have been second in size to the Atlantic City Convention Center. Lastly, it would have really changed the competitive environment in Atlantic City – similar to how The Borgata initially changed it, MGM Grand Atlantic City would have further solidified Atlantic City’s future as a mini-Las Vegas.

Joint Venture with Kerzner International

Aerial view of the MGM/Kerzner site. It will be built around the Hilton Vacation Club towers (the V shaped building on the lower right)

The joint venture with Kerzner International was announced in May of 2007, as a 50/50 joint venture between MGM Mirage and Kerzner International. It encompassed land on the north end of the Strip, just north of MGM’s Circus Circus casino. At the time, very little was said about it – in fact even to this day, MGM mentioned how very little of the design process was even started for the project, probably due to the uncertainty of the debt markets and the economy in general. Plus, MGM Mirage was (and still is) heavily involved in the construction of CityCenter as well as trying to finalize the remaining financing for the CityCenter project.It was expected to have a late 2011 opening.

For those unfamiliar with Kerzner International, they are the firm that has developed the Atlantis Resort in the Bahamas, as well as Dubai. Kerzner also owns “One & Only” all inclusive vacation resorts. Kerzner International is an interesting company as they were one of the original developers of Mohegan Sun Casino, and have grown from obscurity into a developer and owner into some highly respected and well known resort properties.

One good piece of news on these two projects is that they are suspended – rather than cancelled. MGM has full intentions to continue the development and finish them once the credit markets settle down and the economy comes back. Personally I’m expecting development to pick up on these two properties in late 2009 or early 2010. Even though the economy may not be back up by that point – credit markets will be, and by the time the projects are built, the economy should have recovered.

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